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NEW DAY SATURDAY

Macron's Campaign Hacked On Eve Of Election; Carter Page Rebukes Senate Intel Committee In Letter; GOP Bill Faces Tough Senate Battle; WAPO: Trump Transition Team Warned Flynn About Contacts; Unemployment Drops To 4.4 Percent, Lowest In 10 Years; The New Prison Smuggling Threat: Drones; Countdown To Kentucky Derby. Aired 6-7a ET

Aired May 6, 2017 - 06:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


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[06:00:13]

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Emmanuel Macron, the frontrunner in the French election, now confirming what his team is calling a massive coordinated hacking operation.

UNIDENTIFIED MALE: Senior members have warned Michael Flynn about the risk of his contacts with Russia's ambassador.

UNIDENTIFIED MALE: Unlike a lot of other ambassadors, you actually had a very receptive Trump team when it came to the Russians.

UNIDENTIFIED MALE: This is overall effort of the anonymous sources in the meeting to go and try to smear the president.

UNIDENTIFIED MALE: Nobody dies because they don't have access to health care.

UNIDENTIFIED FEMALE: Thirteen men are deciding the future of American health care. There is not one woman at the table to represent more than half the population of this country.

UNIDENTIFIED FEMALE: This House bill would be devastating for women. Women would be denied coverage because of situations that are unique to them.

UNIDENTIFIED MALE: It's an effort to kill off Planned Parenthood.

UNIDENTIFIED MALE: If the bill passed today, thousands of Americans would die.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: The Senate is looking forward to getting it, and I think we're going to have some really great health care.

(END VIDEO CLIP)

CHRISTI PAUL, CNN ANCHOR: Good morning. Welcome to Saturday. I know that I'm sure the alarm is not going off. I'm surprised you're awake already, but we're glad that you are. I'm Christi Paul.

VICTOR BLACKWELL, CNN ANCHOR: Certainly are. I'm Victor Blackwell. New this morning, the leading French presidential candidate says he's been hacked on the eve of their election. Emmanuel Macron's campaign says it was meant to, quote, "Undermine democracy like it happened in the U.S."

France is just the latest country to make claims with foreign interference. This hour, the French Electoral Commission is asking the media not to publish the details out of concerns that it would sway Sunday's outcome.

PAUL: Also this morning, former Trump adviser, Carter Page telling the Senate Intel Committee to ask the Obama administration for his Russia communications. He's got some very salty language. More on that in a moment, but this after promising to cooperate with officials.

BLACKWELL: And a new report from "The Washington Post" says that senior members of the Trump transition team warned Michael Flynn about his contact with Russian Ambassador Sergey Kislyak.

PAUL: CNN international correspondent, Melissa Bell, live from Paris here. So, Melissa, help us understand the reaction this hour to those allegations from the Electoral Commission.

MELISSA BELL, CNN INTERNATIONAL CORRESPONDENT: Well, what we're hearing are two different things really, Christi. First of all from the campaign team around Emmanuel Macron, this announcement last night that they had been the victims of this massive hacking operation with these many thousands of documents then published online.

Now, the trouble is that the timing of this release of this leak, Christi, comes -- it came last night just a few hours before the beginning of this period of a sort of media blackout that you have just before polling begins on Sunday morning.

So the other piece of information we have today is from the French Electoral Commission warning French and international media that the contents of those leaked documents, the e-mails, the documents themselves, cannot be reported because that interferes with electoral law.

I mean essentially this period is designed to give the French time to consider their vote without sort of having the constant fury over media speculation and campaigning on the part of the various parties.

Now, what Emmanuel Macron's team has said is that these leaks involve e-mails, campaign documents, some real, some they say fake, and that that is designed deliberately to cause confusion in this process just a few hours before the polls open in order, they say, to destabilize France's democratic process -- Christi.

PAUL: Melissa, does the fact that there was a hack at all, whether any information can be released or not -- does the fact that there was a hack influence voters in any way, do you think, at this point of the game?

BELL: I think that's the really big question. For the time being, Emmanuel Macron enjoys -- has enjoyed in the last few weeks a substantial lead over his rival. What difference will that make in the minds of voters?

I think it certainly throws up a number of questions and a lot of confusion at the very last minute in what has been a very bitter campaign. Now, this is not the first time that Emmanuel Macron has alleged he is the victim of fake news or cyber-attacks.

This is something that we've been hearing a lot over the course of the last few weeks. They have alleged that they've been a victim of a number of these sorts of attacks, most recently just a couple of weeks ago.

They say that it is a deliberate attempt to help their opponent, the far right's Marine Le Pen. For the time being, though, all we have is the news from their camp that this has happened.

The warning about the reporting of the contents and therefore, a lot of confusion no doubt in the minds of voters about how damaging the leaked documents really are for his campaign.

[06:05:04]PAUL: Because you would assume that at some point they would come out. Melissa Bell, thank you so much. We appreciate the update live for us there from France.

BLACKWELL: CNN's chief national security correspondent, Jim Sciutto, told Anderson Cooper that the hack in France seems very familiar to what happened to the Clinton campaign.

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JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: The timing of this seems very familiar. It's not certain who is behind this hack yet. It takes some time typically to determine that with certainty. But I will tell you this, Anderson, U.S. intelligence officials have been saying to me that Russia, emboldened by its success, some might say, in terms of hacking into the U.S. election and the Democratic Party, et cetera, was emboldened by that.

It was expected, in fact, to target French and German elections that are happening this year. And this kind of thing, stealing e-mails, releasing them right before people go to the polls, fits that pattern.

Again, not certain that it is Russia, but this is the kind of thing that has been warned about from not just European intelligence but U.S. intelligence as well. And the timing really extremely interesting and somewhat alarming.

(END VIDEO CLIP)

BLACKWELL: Let's bring in now to the conversation, Kyle Feidscher, a reporter for "The Washington Examiner," and David Fahrenthold, CNN contributor and reporter for "The Washington Post." Good morning, Gentlemen.

We've got in the last couple of minutes a statement here from Dmitri Peskov, a spokesman for the kremlin. He says "These, like other similar accusations that Russia was involved in some way are based on nothing and are pure slander."

So that coming in in just the last couple of minutes from the kremlin spokesperson, Dmitri Peskov. Let's move on here. We reached out to the kremlin for comment.

It's an obvious call that we make after the similarities between what happened in France and what happened in the U.S., but are there other suspects as the president suggested in the U.S. hacking just as late as the end of April? China, maybe others in this hack, David?

DAVID FAHRENTHOLD, CNN CONTRIBUTOR: Well, as Jim said in that clip you played, nobody has settled on the exact culprit. But it seems Russia is an obvious suspicious party, an obvious place to look both because they've been very supportive of Marine Le Pen's campaign for months, loaning her money.

Le Pen visited Moscow. It's clear Le Pen is the Russian candidates in these elections and also because of the U.S. intelligence community's conclusions about Russian hacking in our elections.

This hacking seemed to follow a very similar pattern. So there's nobody else that has sort of the level of circumstantial evidence against them as Russia.

BLACKWELL: All right, Kyle, let's listen to what Hillary Clinton told our Christiane Amanpour just a couple of days ago.

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HILLARY CLINTON (D), FORMER PRESIDENTIAL CANDIDATE: I was on the way to winning until the combination of Jim Comey's letter on October 28th and Russian Wikileaks raised doubts in the minds of people who were inclined to vote for me but got scared off.

As Nate Silver, who, you know, he doesn't work for me. He's an independent analyst but one considered to be very reliable, you know, has concluded, you know, if the election had been on October 27th, I'd be your president.

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BLACKWELL: All right, so, Kyle, there is one really important difference here, and that's the timing. The Podesta hacking and the e-mails released sporadically over a longer period of time. This comes just at the very end of the campaign. Is there enough time here potentially to sway what happened, and is this the same M.O. of whomever hacked in the U.S.?

KYLE FEIDSCHER, REPORTER, "WASHINGTON EXAMINER": Well, it definitely seems like it's the same M.O. The key word here, I think, is confusion. There's not necessarily -- remember, the Podesta e-mails, there wasn't really a whole lot of damning evidence toward Hillary Clinton and her campaign.

But it was the appearance of, you know, being not transparent and having something to hide that was the issue. And I think that's going to be the same thing here. You know, if there's confirmation of a hack and a leak, but there's not a lot of information that's going to be put out there thanks to this media blackout.

So I think there's going to be an issue in the minds of French voters of what does Emmanuel Macron have to hide given that all those e-mails had to be leaked in order to be released.

As for, you know, whether the timing matters, I think it does given the fact that it happened right before this media blackout takes place. So there is a little bit of information out there, and then there's no actual follow-up on what the contents of these e-mails are.

So it definitely seems like there's a coordinated plan here by somebody, you know, probably the Russians but we're not entirely sure. But there's definitely a coordinated plan in order to make Macron look bad right before this vote.

BLACKWELL: OK, let's turn now to Carter Page, who was an adviser to the Trump campaign in transition, kind of on the periphery there writing this three-page letter that CNN has obtained. I want to put just an excerpt of the letter to the intel committee right up here on the screen.

[06:10:00]He writes, "I suspect the physical reaction of the Clinton/Obama regime perpetrators will be more along the lines of severe vomiting when all the facts are eventually exposed regarding the steps taken by the U.S. government to influence the 2016 election."

David, to you. Your read on that statement and just a couple of days ago, it seemed as if he would cooperate with the Congressional investigation. Does that seem to be the case now?

FAHRENTHOLD: It does not seem to be the case. Carter Page has said that in public, but he has seemed now not to be cooperating with the Senate investigations and saying that they should go get information about him from what the Obama White House had done.

Carter Page is, as you said, seems to have been a really peripheral character in the Trump campaign, in the Trump transition from everything we can tell. Yet he is the most suspicious person I think I've ever seen on television since the election, sort of trying and failing to make sense of his own interactions with the Russians.

I think there's going to be a lot more to be learned about him. I still don't understand his connection to the Trump campaign and to Trump himself. That connection may not be there, but Page himself may be in some trouble.

BLACKWELL: So, Kyle, you know, one question that has stayed with me over the last couple of months is that why is Carter Page talking so much? I mean, there are questions about and for Roger Stone, who was a Trump adviser, questions about and for Paul Manafort, who was the campaign chairman. They're not as vocal as carter Page is. Why is he continuing to speak so much when he knows that there's this ongoing investigation?

FEIDSCHER: That is really a great question. You know, it's really unusual and kind of just bizarre to see someone who is the subject of an FBI investigation, multiple congressional investigations, to be so out front and be willing to put himself on TV and speak to, you know, newspapers and websites.

It's -- you would think that it would be time to lay low and to be quiet, but apparently Carter Page has decided to take a different tack. I'm not entirely sure. I wish I had the answer to that question. I'm sure if a subpoena comes and forces him to testify in front of Congress, maybe we'll get that answer.

BLACKWELL: All right. Stay with us. A little later this hour, we've got to talk about this new reporting from "The Washington Post" about former national security adviser, Michael Flynn. Kyle Feidscher and David Farenthold, thanks so much.

PAUL: Bombshell reporting surrounding former National Security Adviser Mike Flynn. "Washington Post" as Victor said - claiming President Trump's own transition team warned Flynn about the severity of his contacts with Russia.

BLACKWELL: Plus, the GOP health care bill set to face an uphill battle in the Senate while Republican lawmakers face skeptical constituents back home. We're going to show you the fallout from Washington to Main Street.

PAUL: And a Dallas police officer who shot an unarmed 15-year-old boy will now face murder charges.

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UNIDENTIFIED MALE: It doesn't take away the sting of obviously losing their son, but it does soften the blow of it.

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[06:17:11]

BLACKWELL: Former Dallas area police officer, Roy Oliver, is now facing a murder charge. Oliver was arrested for shooting and killing an unarmed teenager last weekend. His bond was set at $300,000, and he's out after posting bail now.

Investigators say he shot 15-year-old Jordan Edwards as he rode in the passenger seat of a car. The city's police chief first said the car was driving towards the officer when he opened fire.

He later said that he misspoke after body cam footage showed the car driving away from the officers. We'll break down this case with a criminal defense attorney in the next hour of NEW DAY.

PAUL: Well, the Republican health care bill heading now to the Senate where lawmakers are ready to tear into that plan. Far from the celebratory GOP senators who wanted to make significant changes to the bill, changes that could adversely impact the party in midterms.

In fact, fallout from the House provisions are already on display at GOP town halls across the country. Congressman Raul Labrador in fact faced his constituents last night in Idaho. He was shouted down on the issue. Listen to this.

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UNIDENTIFIED FEMALE: You're mandating people on Medicaid accept dying. You are making --

UNIDENTIFIED MALE: No one wants anybody to die. You know, that line is so indefensible. Nobody dies because they don't have access to health care.

(END VIDEO CLIP)

PAUL: He said there nobody dies because they don't have access to health care. That's what prompted it. Senate Republicans announced a group of 13 members that will write its own health care proposal. All those members, however, are men, which has caught the ire of many considering that so many of the issues that we talk about with health include women's issues.

In the meantime, the New York attorney general, Eric Schneiderman plans to sue the Trump administration if the health care bill does become law. He claims that it weakens protections for those with pre- existing conditions and specifically imposes an "undue burden on women's constitutional rights." That's a quote. Here's CNN's Sunlen Serfaty, who has more of the details.

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SUNLEN SERFATY, CNN CORRESPONDENT (voice-over): Beyond the politics of the Washington beltway, the House-passed bill has some serious implications for the 117 million Americans living with pre-existing conditions, especially women.

Critics charging the bill in its current form would hit women especially hard. For example, women who are pregnant, have had a previous C-section, have irregular periods, have breast cancer, and endometriosis among others could all be slapped with a pre-existing condition label.

Opening up the door for insurers to potentially deem them uninsurable, deny them coverage, or charge them higher premiums by pushing them into high-risk pools where the policy may not be as affordable.

[06:20:07]GRETCHEN BORCHELT, NATIONAL WOMEN'S LAW CENTER: This House bill would be devastating for women. Women would be in the same situation where they're denied coverage because of situations that are unique to them, and that's discrimination.

SERFATY: The bill doesn't explicitly define what a pre-existing condition is. The U.S. Department of Health and Human Services says a pre-existing condition is a health problem you had before the date that new health coverage starts.

That puts the power in the hands of insurance companies to decide with nearly any illness or medical condition on the table able to be considered pre-existing, including potentially domestic abuse or rape if a survivor was seeking mental health help.

SOFIE KARASEK, DIRECTOR OF EDUCATION, END RAPE ON CAMPUS: Frankly the most concerning part about this is that it sends the message to survivors that, you know, you're going to be punished for this and effectively establishes a premium on experiencing rape or sexual assault.

SERFATY: Forty five states have previously passed laws that prohibit insurers from classifying domestic abuse and rape as pre-existing conditions, but this has raised some alarm on Capitol Hill.

SENATOR BOB CASEY (R), PENNSYLVANIA: Will you commit to maintaining the protections that ensure that victims of domestic violence will not be discriminated against when purchasing health insurance?

TOM PRICE, HEALTH AND HUMAN SERVICES SECRETARY: I think it's absolutely vital that victims of domestic violence and others, anybody, we need a system in place that ensures that individuals are either not priced out of the market.

SERFATY: It set off social media with the hashtag, #IAmAPreexistingCondition. The fine print of all of this comes down to what state a woman lives in. The new health passed bill gives states an option to opt out of an Obamacare provision, which bans insurers from charging enrollees more based on their medical history.

In states that decide to do so, insurers could charge higher premiums to those with pre-existing conditions who let their coverage lapse. But without knowing how many states would actually seek that path and how all of this would actually work yet means many people with pre- existing conditions, especially women, for now are left in limbo.

(on camera): And also included in the House-passed bill is a provision that blocks Planned Parenthood from getting Medicaid funding for one year. And as this bill moves over to the Senate, where likely they will be significant changes ahead, this could turn into a major sticking point for a very small but very important group of Republicans. Sunlen Serfaty, CNN, on Capitol Hill.

(END VIDEOTAPE)

BLACKWELL: This morning, there are new scathing details about former national security adviser, Michael Flynn. "The Washington Post" claiming that President Trump's transition team, his own team, warned Flynn about the severity of his contacts with Russia. PAUL: Also North Korea accuses the U.S. of planning a detailed attack to assassinate its supreme leader. Those accusations and the U.S. response now just ahead. Stay close.

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[06:27:18]

PAUL: So good to have your company on this Saturday morning. I'm Christi Paul.

BLACKWELL: I'm Victor Blackwell. Good morning to you. An explosive report surrounding former national security adviser Michael Flynn, now according to "The Washington Post," senior members with President Trump's transition team warned Flynn on multiple occasions about his contacts with Russian ambassador Sergey Kislyak.

PAUL: The report claims the officials were so concerned that Flynn didn't understand the ambassador's motives, they went to the Obama administration for help, asking for a classified profile on Kislyak. But it's not clear if Flynn ever read that document.

It is the latest in a series of events since the election that has really raised these red flags for the intelligence community here. Scathing detail now prompting new questions about Flynn's contacts, what the White House may have known, when they may have known it.

Kyle Feidscher, a reporter for "The Washington Examiner" and David Fahrenthold, CNN contributor and reporter with "The Washington Post" both with us now. Gentlemen, thanks again for sticking around.

I want to put up a timeline here just so we have an understanding of what they're talking about, what they lay out here in "The Washington Post" report regarding back in November apparently the White House staff or the transition team having conversations with Michael Flynn, warning him about the discussions he was having.

And then all the way into January and February when he finally bowed out, let's say. So when we look at this timeline and we wonder what exactly the White House knew and what was happening with Kislyak, we know they were exchanging text messages, cell phone calls. What do you make, David, about the tension that this may have caused within the transition team?

FARENTHOLD: Well, it sounds like the sort of experienced professional folks that Trump had brought in as his transition team, the person who was leading these warnings was someone who had worked for the Bush administration.

These folks were growing increasingly alarmed by what seemed at best stupid behavior by Michael Flynn. Flynn used to be the head of the Defense Intelligence Agency. He should know this, but they were warning him again.

Look, U.S. intelligence agencies are surveilling the Russian ambassador. If you talk to him, your conversations will be picked up and recorded, and the U.S. intelligence will hear what you're saying, so don't do it.

And Flynn seems to have persisted in doing it anyway. I still have not heard any explanation besides possibly stupidity why he would do such a thing.

PAUL: Kyle, one of the statements that stands out here too when you really take a good look at this article, is the fact when they talk about the Trump transition team knowing something, we have to remember Vice President Pence told the country he had no idea that Flynn had any connections to Russia.

[06:30:00] What does it tell you, that now there's this report about what the Trump transition team knew? Does it tell you that maybe Pence knew something more, or that the transition team was not being really fluid and transparent with the Vice President himself?

FELDSCHER: Yes, that's definitely a question that has to be asked at this point because, you know, if there are top security officials on the transition team, you would think they would be keeping, you know, the Vice President and the President in the loop. But at the same time, this might have been something that was kept separate from, from the top people in the transition. It might have not really raised to that level and thought that it could be something that they could deal with without having to bring in, you know, the President. So, it's a question that has to be asked, but I'm not entirely sure what this - what we can tell from what we have here.

PAUL: All right. Let's listen here to the President because it seems he's still - I mean he hasn't yet publicly condemned Russia for the election hacking. I want to listen to what he said recently in an interview with CBS here.

(BEGIN VIDEO CLIP)

DONALD TRUMP, UNITED STATES PRESIDENT: If you don't catch a hacker, OK, in the act, it's very hard to say who did the hacking. With that being said, I'll go along with Russia. It could have been China. It could have been a lot of different groups.

UNIDENTIFIED MALE: So, President Trump is ambivalent about - you're not ambivalent, you're just not sure.

TRUMP: I'm not. No. We have to find out what happened. I'd love to find out what happened. I can tell you one thing. It had nothing to do with us. It had nothing to do with this, and everyone knows it.

(END VIDEO CLIP)

PAUL: All right. David, your reaction to that.

FAHRENTHOLD: Well, the idea that it maybe wasn't Russia, that it could be somebody else, that's an open question. That really flies in the face of a lot of pretty explicit conclusions from the U.S. Intelligence Agencies who said it was Russia. They interfered with the intention of helping Donald Trump. Now, whether Donald Trump knew about that and wanted them to help him, that's the subject of investigations now. But the Intelligence Community's been very clear about who they believe did it and why they believe did it. It's very strange that President Trump hasn't been exposed to that conclusion - repeatedly seeks to undermine it.

PAUL: Kyle, why do you think the President does not embrace what the Intelligence Community has proven thus far?

FELDSCHER: Well, I think it goes against a lot of what President Trump believes about himself. He likes to - he really trusts in his own demeanor and his force of personality and believes that's the reason why he won the election. He doesn't want to believe that there's any sort of - they got any sort of help. It was him versus Hillary Clinton in his mind, and there was no - it happened in a vacuum, it seems like. So I don't think that it's - you know, a lot of people alleged that he has Russian connections, that kind of thing, but it seems like it's more based off of his own egotism and looking at himself as a force of personality that convinced these voters as opposed to possibly looking for some outside influence.

PAUL: David, just this morning between this Washington Post article that's come out and the information in France about the hacking - and again, just to be very clear, we don't know that Russia was behind any hacking involved in the French election. But how do you expect the President will respond to both of these news stories that are coming out this morning, and how soon might we hear from him?

FAHRENTHOLD: Well, if President Trump follows his previous patterns, he will either say nothing or dismiss the implications that these reports raise that Russia's trying to help people who oppose sort of the European Union, NATO. Russia's undermining western institutions by supporting candidates like him and Marine Le Pen. It's possible - excuse me about that - but in the past, he's tended to dismiss it or not comment on it at all. I do not expect some sort of condemnation for President Trump of what Russia perhaps has done in France.

PAUL: Is it important, Kyle, for the President to condemn Russia at this point?

FELDSCHER: You would think under a past administration, it would probably seem like standard operating procedure to condemn any sort of influence in democratic elections. But at this point with President Trump, if there's one thing we know, it's that he's not conventional, and he's not like our past Presidents. So, whether it's important or not, I think a lot of people would like to see it. I don't think this is something that President Trump is overly worried about. He's at this point looking at tax reform and looking at health care to the senate. Whether he is overly concerned about a French election, I don't know if that rises on his radar.

PAUL: OK. Kyle Feldscher and David Fahrenthold, we appreciate both of you sticking around for us. Thank you.

FELDSCHER: Thanks.

BLACKWELL: All right. Some good news this week: The U.S. now is at 4.4 percent unemployment, the lowest rate in a decade. Here's CNN's Chief Business Correspondent, Christine Romans, with more on what's driving that number from the latest jobs report.

[06:34:44] CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Christi and Victor, the headline number here is that May 2017 low: 4.4 percent is the jobless rate. It's a level many economists consider nearing full employment, meaning companies have to start competing for the workers, and that can start driving up wages. Now, we don't see that yet in this report. Wages' just a stagnant 2.5 percent, but 4.4 percent unemployment is definitely a rate that is a milestone here.

Let's look at where the jobs are created, 211,000 net new jobs. You can see that something happened in March: A cool-down in optimism among employers or hiring of employees. Really, when you average out the last three months: on average 174,000 net new jobs created. That's below the 208 or so. It'll take every month to fulfill the President's promise of 25 million new jobs over the next ten years or so. So, still kind of a steady pace of hiring overall, and it's good that it picked up a little bit in the most recent month.

Where are the jobs gains in financial services? Look at health care, up 37,000 since Obamacare was signed in 2010, a million and a half new jobs in health care. This would be a critical space to watch as health reform continues anew here in Washington. Hospitals emboldened by the fact that so many more people are getting health care and will be paying customers; they have been adding jobs for several years now. So, could this cool the job creation in health care? That remains to be seen.

Manufacturing, also notable. 6,000 manufacturing jobs created in the month, really, over the past three months. Christ and Victor, you've seen jobs added in manufacturing. If you rewind the clock, last year at this time, we were losing jobs in manufacturing. So, Donald Trump - President Trump's policies, if not his rhetoric, are getting some of the credit for those jobs gains there. Christi and Victor.

PAUL: All right. Christine, thank you so much. It is the new smuggling threat for prisons across the country. How wardens are now fighting back against drones.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Around Christmas, the drones were coming in, dropping and going, dropping and going.

(COMMERCIAL BREAK)

[06:40:53] BLACKWELL: The U.S. and South Korea - we just-

PAUL: Didn't know we were coming up here.

BLACKWELL: But we're back. We're back.

PAUL: Everything's good.

BLACKWELL: So, let's talk about the U.S. and South Korea this morning, denying assassination claims made by North Korea. The communist regime alleges that they teamed up to try to kill its leader, Kim Jong-un, with a biochemical weapon.

PAUL: North Korea released a detailed report about the alleged attack. It didn't really give any evidence whatsoever. The report claims America recruited a North Korean citizen to attack Kim Jong-un at a military parade. The North Korea claims it foiled the assassination attempt. We need to note here, North Korea does have a history of making unfounded claims such as vowing to wipe out the U.S. with 5 million nuclear bombs. CNN was not able to independently corroborate this latest allegation, we want to point out. It was just a year ago, when Donald Trump told crowds that China was, "raping our country." Now, he's backing away from some of that tough talk and likely it is because of the growing tensions in North Korea.

BLACKWELL: Yes. Since President Trump took office, the U.S. military has avoided sailing in parts of the contested South China Sea. And the Pentagon is now toning down how it refers to military action in the region to avoid seeming to be too aggressive. CNN International Correspondent, Matt Rivers, is live in Beijing for us. And Matt, for this President, with such harsh rhetoric in his past about China raping the U.S., being a currency manipulator, we're seeing quite a few concessions made by the U.S. now.

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes, absolutely. And I think what you're seeing under the Trump administration when it comes to U.S. military action in this part of the world is certainly different than what we saw during the latter years of the Obama presidency. So, let's remind our viewers exactly what was going on. In the last 18 months, there were three - what's called Freedom of Navigation Operations or FON Ops that were undertaken by the U.S. Navy in the South China Sea, near Chinese-made artificial islands.

All three of those operations, which sent U.S. Navy ships on patrol within 12 nautical miles of Chinese-made artificial islands in that part of the South China Sea. All three of those operations were conducted under the Obama administration. Once President Trump assumed the oval office, a Senior U.S. Defense official tells CNN that the U.S. military in the pacific requested to conduct one such operation, and that request was denied. That official telling CNN that that request was denied in part because of what you mentioned, that operations like that could be viewed as antagonizing China or North Korea.

And as we know, the President really wants China to help solve the ongoing crisis in the Korean Peninsula. So, these kinds of operations in the past have made Beijing very upset. It's designed to challenge those Chinese territorial claims with those artificial islands, and that's something the Obama administration made quite public. So, that's something at least for now that the Trump administration says it's not going to do. But another U.S. Defense official did tell CNN that at some point, those Freedom of Navigation Operations will likely resume at some point and that this is just a broader review of the overall program. But the fact remains that we don't have a timeframe on when they're going to start those operations again. And the Chinese continue to militarize those artificial islands. And for now, the United States is not challenging those territorial claims.

BLACKWELL: That's such a dramatic shift for the President. Matt Rivers for us in Beijing, thank you.

PAUL: Listen to this. It's the latest method for smuggling contraband into prisons. Now, crawling under the fences or climbing over them, but flying over them with a drone. Here's CNN National Correspondent, Deborah Feyerick.

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DEBORAH FEYERICK, CNN NATIONAL CORRESPONDENT: At prisons throughout South Carolina, trees are being cut down and cleared, more guard towers are being built, and patrols have been added to bolster security beyond the razor wire fence. It's all because of these drones, a high-tech threat to prison security, delivering drugs and other contraband to prisons across America. Prison officials say an inmate will coordinate with somebody on the outside, sending the date, the time, and the location of the drop. The inmate will then do counter surveillance, warning the drone operator if an officer is coming and the drop has to be made someplace else. The ability to access contraband, how much more power does that give to the inmates?

[06:45:17] BRYAN STERLING, SOUTH CAROLINA DEPARTMENT OF CORRECTIONS DIRECTOR: It gives them a lot of power. I mean, they're making a lot of money behind bars in dealing with contraband and the scams they can run on the contraband cellphones.

FEYERICK: Brian Sterling is the Director of South Carolina's 22 prisons and detention centers. He says this is about five months' worth of drugs, tobacco, cell phones, chargers, and other contraband smuggled in an old-fashioned way, hidden in things like books or body cavities. Now, add drones.

STERLING: I talked to a Sheriff and he said, it was like Washington National. They were just around Christmas; the drones were coming in, dropping and going, dropping and going. They had numbers on them, and the numbers were corresponding to inmates and that's how they were getting in.

FEYERICK: The problem has become so significant - lawmakers in the South Carolina senate recently passed a bill making it a misdemeanor to fly drones within 500 feet of prison walls or 250 feet above the prison itself. The penalty is a $500 fine and 30 days in prison. Other states like Arizona, Oklahoma, Oregon, and Tennessee have or are considering similar legislation. The problem is not just in the U.S., but Europe as well.

In London, an inmate here, signaling his precise location to a drone operator. The British media also reporting drones may have been used to smuggle in wire-cutting tools used in a prison escape. Sterling says South Carolina is spending millions to secure its prison perimeters, making it harder for people smuggling contraband to hide. Several drone operators have been prosecuted and are now serving time.

STERLING: We looked at shooting them down, but there's a lot of innate dangers there too. So, I mean, we feel like our hands are tied. FEYERICK: The drone assault is not likely to let up. Drone sales

expected to surge from 2.5 million in 2016 to 7 million by 2020. Deborah Feyerick, CNN, Columbia, South Carolina.

(END VIDEOTAPE)

PAUL: Wow! All right, we are about 12 hours away from the most exciting two minutes in sports.

BLACKWELL: Coy Wire is so excited about the Kentucky Derby that he pulled out his bow tie. He's at Churchill Downs at Louisville. Good morning to you.

COY WIRE, CNN SPORTS CORRESPONDENT AND ANCHOR: Good morning, Victor and Christi. Roses, mint juleps, with everybody flashing fashion. It's the fastest two minutes in sports. The Run for the Roses: the Kentucky Derby day on this new day. I know the fun will be out. Alison, please tell me the sun will be out.

ALLISON CHINCHAR, CNN METEOROLOGIST: I hate to crush your dreams but I don't think that hat is going to do you much favor today because rain is expected in the forecast, especially leading up to the race. And that's a big deal because that's likely going to make that track incredibly muddy for the big race today. When we look at the actual radar, you'll notice a lot of heavy rain expected to push through as we go into the late afternoon hours, again, leading right up to that race time. But the main system as a whole is actually starting to bring the flood potential to portions of the northeast as well as the mid-Atlantic.

That rain has already started, and because of that, take a look. 19 cities broke daily rainfall records yesterday across portions of the northeast and the mid-Atlantic. But we've been talking about the flood threat over towards the Midwest, and it's not over just yet. The rain itself may be dying down, but we're still going to be dealing with flood impacts from a lot of the rivers that are here because that's a delayed impact. Still, 27 rivers currently at major flood stage; cities like St. Louis cresting today, but other locations along the Mississippi river, especially around Memphis, guys, aren't going to crest until next week. Stick with us. More right after the break.

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[06:23:22] PAUL: All right. 143rd Run for the Roses, yes, it is today, and you will know that by the way Coy Wire is dressed if nothing else.

BLACKWELL: That's true. He's there at Churchill Downs with a preview of today's Kentucky Derby. I saw the hat. The bow tie is nice. What are you looking forward to, Coy?

WIRE: Coming from you, Victor, that means a lot. Good morning to you and Christi, as well. We have an incredible story of perseverance, a 54-year-old Antonio Sano, trainer of a horse named Gunnevera was the top trainer in his native Venezuela. Then he was kidnapped for ransom not once, but twice. And on the second time, guys, he was held for 36 days, chained to a wall in a room with no windows, toilet or running water, hardly any food. He lost 40 pounds. Sano didn't know if he'd ever see his family again. Listen.

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ANTONIO SANO, GUNNEVERA TRAINER: The most difficult situation is every day when I think maybe they'll kill me. I pray every day the opportunity to be free of my kidnapping and come to the United States. After my kidnappings are no more in Venezuela, I take my wife and kids and go to the United States, a new life.

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WIRE: Now, as Sano is finally released, no money left after paying the ransom. Sano moved his family to Florida, starting from scratch. Now eight years later, Sano has the chance to win the Kentucky Derby with Gunnevera, putting the cherry on top of this incredible story of overcoming the odds. One of the fan favorites this year with the odds stacked against him, a one-eyed horse named Patch. He had his left eye removed last year after an infection set in.

He's a long shot to win the Derby. He has drawn the outside 20th post, so he won't be able to see the rest of the field to his left, but all eyes will be on Patch to see if he can pull off a big upset today. Now, the Kentucky Derby is called the "Run for the Roses" because of the 465 roses hand sewn into a garland that will be draped over the winning horse. The Kroger Company has been the official florist of the Kentucky Derby for the last 31 years, and Carol Bessler has been sewing the roses on the garland the entire time. She let us sew one on too. Watch.

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CAROL BESSLER, KROGER COMPANY FLORIST: Each derby has been spectacular. One is just as important as the other. So we enjoy it. It's in our blood.

WIRE: All right. So, this one is for Victor and Christi and all of our NEW DAY family. It's going in. Here we go.

BESSLER: Happy Derby!

WIRE: Happy Derby!

BESSLER: Happy Derby!

(END VIDEO CLIP)

WIRE: Carol said it's like Christmas for her every year at this time of year. She and her Kroger team have been here behind me across the track there since 4:00 a.m. Eastern, guys, creating the seven huge urn arrangements of roses that'll be in the winner's circle today. It's ten feet long and 40 pounds, that garland. It was an honor to be able to sew on one of those roses for us on this NEW DAY.

PAUL: That is a more or like stories of overcoming this year. BLACKWELL: Yes. Yes.

PAUL: -- are just fantastic. Coy Wire, you enjoy yourself. You know we'll be checking in with you throughout the rest of the morning.

[06:26:33] BLACKWELL: All right, quick break. We'll be right back with the next of NEW DAY.

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